Even with Tesla’s newly completed Gigafactories in Berlin and Shanghai, the automaker is working to expand production even further. Over the next month or so, Tesla plans to significantly increase production at both of these plants, but the automaker may have to take a costly production break to upgrade the sites.
Tesla is pausing production at both its Gigafactory Berlin and Shanghai, set to help the automaker upgrade its production lines for higher output capacities, according to a report from Bloomberg. Both factories are expected to complete their expanded production lines by early August, according to people familiar with the matter.
Tesla’s Giga Shanghai began its production pause on most Model Y production on July 1, set to take around two weeks to complete. Then, the Shanghai factory will stop the Model 3 line for about 20 days starting on July 18, which will be completed in early August.
Additionally, Giga Berlin will start a two-week production halt on July 11, with Tesla planning to double its production rate in August, according to an unnamed source. Last month, Giga Berlin built around 1,000 Model Y units in a single week, while also producing more vehicles worldwide than in any month in history.
Despite the record production month in June, Tesla CEO Elon Musk has made multiple mentions of financial concern over the past few months, including a note that the automaker had a “tough quarter” in Q2, and that the company’s new factories are burning money.
“Berlin and Austin are losing billions of dollars right now because there’s a ton of expense and hardly any output,” Musk said in May to the Tesla Owners of Silicon Valley group. “Getting Berlin and Austin functional and getting Shanghai back in the saddle fully are overwhelmingly our concern.”
At the time of writing, Tesla’s shares are trading at $733.60 (+$38.25), up 5.50 percent from the market’s open, and holding fairly strong despite some bumps over the past month. With Tesla’s shares heading into Q3 looking well-poised to manage the ongoing economic downturn, shareholder reactions to the company’s recent earnings report are yet to be determined. Tesla currently has its quarterly earnings report scheduled for July 20.
Although Tesla will no doubt lose out on some revenue during the production halts at Giga Shanghai and Berlin, the result, expected to double the output capacities of each plant, is likely to pay off down the road — especially on the cusp of a potential economic recession.
Originally posted on EVANNEX. By Zachary Visconti
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